Tri-Cities Broadband Initiative

11/13/02 United Telesystems, Inc. 1

Tri-CitiesBroadband Initiative

November 13, 2002

J. Allen DavisUnited Telesystems, Inc.

1 Greatcoat LaneSavannah, GA 31411Phone: 912-598-7223Fax: 912-598-9444

e-mail: [email protected]


United Telesystems, Inc.

• Broadband System Development• Competitive Broadband Projects

– Hybrid Fiber/Coax (“HFC”)– Fiber-to-the-Customer (“FTTC”)

• Current Client Base– LECS & CLECS– Municipals– Electric Utilities– Startups


UNITED TELESYSTEMS, INC.MUNICIPAL CLIENTS

Service Provider Status Service Provider Status

Bolivar Electric Department Project On Hold City of Vidalia, GA Business Plan CompletedCity of Acworth CableNet System Launched February 2001 Clay County, FL Business Plan CompletedCity of Andalusia, AL Business Plan Completed Coldwater Board of Public Utilities Operating SystemCity of Barnesville, GA Fiber Agreement Negotiated with Charter Columbia Power & Water System System Under ConstructionCity of Baxley, GA Business Plan Completed Covington Cable Operating SystemCity of Cairo, GA Under Construction Covington Elecric System System Launch March 2002City of Camilla, GA Under Construction Covington Electric Cooperative Business Plan Under ReviewCity of Commerce, GA Business Plan Completed Electric Power Board of Chattanooga Business Plan Under ReviewCity of Elba, AL Business Plan Completed Fairburn Utilities Bond Issue Closed May 2001City of Elberton, GA System Under Construction Fayetteville Electric System System Launched March 2001City of Fitzgerald, GA Business Plan Completed Forsyth CableNet Operating SystemCity of Flagler Beach, FL Strategic Plan Completed Gainesville Regional Utilities Business Plan CompletedCity of Floresville, AL Strategic Plan Completed Hopkinsville Electric System Business Plan in ProgressCity of Hartford, AL Franchise Assessment Completed Jackson Energy Authority Business Plan CompletedCity of Healdton, OK Business Plan Under Consideration Lawrenceburg Power System Business Plan CompletedCity of Jacksonville, AR Business Plan Completed Murfreesboro Electric Department Survey & Strategic Planning CompletedCity of Little Rock, AR Business Plan Completed Nashville Electric Service Strategic Planning CompletedCity of Maumelle, AR Business Plan Completed Newnan Utilties System Launch 1996City of Monroe, GA Business Plan Completed Opp Cablevision Operating SystemCity of Monticello, GA Business Plan Completed Poplar Bluff Municipal Utilities System Launched 2001/Acquisition PendingCity of Moultrie, GA System Launch 2001 Princeton Electric Plant Board Board Approval PendingCity of North Little Rock, AR Business Plan Completed Pulaski Electric System Comptroller Filing in ProgressCity of Paragould Water & Light, AR Business Plan Completed Ripley Power & Light Business Plan CompletedCity of Slocomb, AL Franchise Assessment Completed Scottsboro Electric Power Board System Launched 1998City of Sylvester, GA HE Arrangement Pending Springfield Electric Department Business Plan in ProgressCity of Thomaston, GA Business Plan Completed Stevenson Utilities Business Plan CompletedCity of Thomasville System Launched 1999 Swainsboro Development Authority Business Plan CompletedCity of Tifton CityNet System Launched 1999 Tullahoma Utilities Board State & Local Approval Obtained


United Telesystems, Inc.Municipal Broadband Project Financings

Plant Homes FinancingFranchise Area Miles Passed Through 10/02 Phases Status

Acworth, Georgia 130 6,036 $12,200,000 Phases I & II February 2001 LaunchCairo, Georgia 113 4,260 $6,600,000 Phase I September 2001 LaunchCamilla, Georgia 58 2,407 $3,600,000 Phase I December 2001 LaunchColumbia, Tennessee 253 16,268 $15,000,000 Phase I Bond Issue Closed 3/02Covington, Georgia 379 15,900 $2,640,000 Phase I Operating SystemCovington, Tennessee 91 4,518 $5,720,000 Phase I February 2002 LaunchFairburn, Georgia (Union City) 102 5,749 $3,340,000 Phase I Operating SystemFayetteville, Tennessee 237 6,794 $11,560,000 Phase I & II March 2001 LaunchForsyth, Georgia 94 2,530 $5,400,000 Phase I Operating SystemHopkinsville, Kentucky 291 14,664 $26,850,000 Phase I City Council Vote PendingJackson, Tennessee 678 31,239 $62,000,000 Phase I Bond Issue to Close 8/02Moultrie, Georgia 160 7,358 $9,250,000 Phase I November 2001 LaunchPoplar Bluff, Missouri 177 10,065 $16,520,000 Phases I & II August 2001 LaunchScottsboro, Alabama 179 6,172 $9,500,000 Phases I & II Operating SystemTifton, Georgia 201 10,061 $7,900,000 Phase I Operating SystemTotal 3,143 144,021 $198,080,000


Community Objectives

Improve Local InfrastructureEnhance Educational OpportunitiesPromote Industrial/Commercial GrowthImprove Utility Operating EfficienciesDiversify RevenuesLocal Reinvestment of Service Revenues


Community Network Service Objectives

Enhanced Available Service OfferingsVideo Services

AnalogDigitalInteractive Services

High-Speed Data and Internet AccessTelephone ServicesUtility Automation


Market EnvironmentPlayers Content ApplianceTransportConsumer

Movies

Books

HealthCare

Music

InformationServices

HomeShopping

Wireline

Broadcast

Wireless

Cable

Phone

Cellular/PCS

GamePlayer

SetTop

Multi-Media

Business/Professional

Home/Consumer

Campus/University

Multi-TenantResidential

• Cable TV Companies• Telephone Companies• Interexchange Carriers• Wireless Providers• Competitive Access

Providers• PCS Operators• Value Added Resellers• Internet Access

Providers• High Speed Data

Providers


FTTC Network Infrastructure

Fiber-to-the-Customer NetworkUnlimited CapacityTwo-Way Capability1 Home Nodes

Wide Area/Local Area Telecom NetworkCommercial Telecommunications PlatformExpanded Service Area Opportunities


FIBER-TO-THE-CUSTOMER ARCHITECTURE

HEADEND

Fiber Drop

FIBER OPTIC DISTRIBUTION

Fiber Feeder

Fiber Feeder

Fiber Drop

Fiber Feeder



FTTC vs. HFC

• Initial Capital Investment– Upgrade/Rebuilds– Green Field

• Future Rebuild/Upgrade Costs• Service Provisioning• Bandwidth and Provisioning New Services• Technical Support• System Operations• Marketing and Customer Perception


DEMOD

Earth StationAntennasTape Deck

System Manager TYPICAL HEADENDOPERATION

I S P

VIDEO AND AUDIO PATCH SWITCH

MOD MOD MODSTEREO

ENCODERMOD

COMBINER

ATX TRANS 1

TRANS 2

TRANS 3

W

ReturnReceiver

RETURN FIBERFROM NODES


TelephonyOperationSupport

Class 5LDS

ServerComplex

TelephonyHost

Data Gateway

DigitalVideo

FiberSystem

Analog Video

NID/HUDP

TV

Data/Modem

FTTC Network Equipment

Fiber

HEADENDMeter

Reading

PON/LMC

All Fiber BroadbandInfrastructureNetwork Elements Subscriber Access

New services can be added incrementally given suitable Network infrastructure.


T-1s

FTTH Network

Equipment

FiberSystem

Optical Network

UnitEthernet

Card

FTTC High Speed Data Service

FiberTap

RFAmplifiers

HEADEND

Operation/CustomerService Support

ON

All FiberInfrastructure

Data Network Elements Subscriber Access

1. Broadband network provides connectivity from the customer premise to headend.2. Telco provides T-1 lines from the headend to the Internet.3. The data equipment is imbedded in the network architecture4. City/Vendor provides customer service and network operations support.5. Contractor provides service installation and on-site tech support.


The Tri-Cities Business Plans• Service Area Assessment

– Residential– Commercial

• Market and Industry Analysis• Federal and State Legal Review• Incumbent Service Providers Assessment• Proposed Infrastructure & Deployment Plan• Partnering Assumptions• Capital and Operating Budget


Tri-Cities Consolidated PlanTri-Cities, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002Project Summary

Service Area Summary PercentageAerial Plant Miles: 180 39.5%Underground Plant Miles: 276 60.5%Total Plant Miles: 456 Total Potential Residential Customers Passed: 29,337 86.6%Total Potential Commercial Customers Passed: 4,541 13.4%Total Potential Customers Passed: 33,878 Total Potential Customers Per Plant Mile: 74.30

Projected CustomersVideo Services - Residential 10,561 36.0%High Speed Data - Residential 3,639 12.4%Telepone Service - Resdidential 2,369 8.1%Video Services - FCC Equivalent Commercial Units 47 1.0%High Speed Data - Commercial 795 17.5%Telephone Service - Commercial 550 12.1%Total Customer Service Units: 17,960

Total Project Capital Budget: $56,944,394Total Project Capital Per Plant Mile: $124,887Total Project Capital Per Customer Service Unit: $3,171Total Project Capital Per Potential Customer Passed: $1,681


Tri-Cities Fiber NetworkBatavia, Geneva & St. Charles, Illinois

Analog Channel Lineup

Channel Service Channel Service2 WBBM (2) CBS Chicago 43 ABC Family Channel3 WFLD (32) FOX Chicago 44 Lifetime4 The Weather Channel 45 Women's Entertainment5 WMAQ (5) NBC Chicago 46 Oxygen6 WCIU (26) IND Chicago 47 HGTV7 WLS (7) ABC Chicago 48 The Learning Channel8 WPWR (50) UPN Chicago 49 DIY Network9 WGN (9) WB Chicago 50 ESPN10 Local Community Channel 51 ESPN 211 WTTW (11) PBS Chicago 52 ESPN Classic Sports12 WCPX (38) PAX Chicago 53 The Golf Channel13 WJYS (62) Christian Chicago 54 Outdoor Life Channel14 HBO 55 Speed Channel15 HBO 2 56 Fox Sports Midwest16 HBO Family 57 Outdoor Channel17 WGBO (66) UNIVISION Chicago 58 Inspirational Network18 TBS 59 TBN19 WSNS (44) TELEMUNDO Chicago 60 EWTN20 WYCC (20) PBS Chciago 61 CMTV21 Educational/Govt. Access Ch 62 Great American Country22 TV Guide Channel 63 VH-123 Headline News 64 BET24 QVC 65 MTV25 HSN 66 Comedy Channel26 Fox News 67 Court TV27 CNN 68 C-Span28 MSNBC 69 C-Span 229 CNBC 70 Tech TV30 The Disney Channel 71 Sci- Fi Channel31 USA Network 72 National Geographic32 The National Network 73 Discovery Health Network33 fX 74 Food Network34 The History Channel 75 Travel Channel35 The Discovery Channel 76 Bravo36 Animal Planet 77 Fine Living37 TV Land 78 E! Television38 Nickelodeon 79 Game Show Network39 Cartoon Network 40 American Movie Classics 41 A & E 42 TNT


TRI-CITIES FIBER NETWORKDigital Video Services

Service Service Service

Digital Basic Tier Services Digital Premium Services Digital Premium Services

Discovery Kids Encore Group HBO GroupDiscovery Science Encore HBO EastDiscovery Home & Leisure Encore Westerns HBO PlusDiscovery Wings Encore Action HBO SignatureDiscovery Civilizations Encore True Stories HBO Family EastSoapNet Encore Mystery HBO Comedy EastBBC America Encore Love Stories HBO Zone EastMuch Music Toon Disney Starz!/Encore Group Cinemax GroupNoggin Encore Cinemax Nick Games & Sports Starz! More Max EastWAM! Starz! Theather Action Max EastBoomerang Starz! BET Movies Thriller Max EastBloomberg Television Starz! Family CNN/FN Starz! Cinema The Movie Channel GroupCNN en Espanol The Movie Channel EastInspirational Life TV Digital Audio The Movie Channel 2Style Music Choice (45 Channels) The Movie Channel WestLifetime Movie Network IFC Digital Pay-Per-View Channels Showtime GroupBET on Jazz In Demand PPV Preview Showtime EastVH 1 Classic Rock In Demand (21 Channels) Showtime 2 EastVH-1 Country ESPN Sports Packages Showtime 3 EastVH 1 Soul NBA/WNBA League Pass Showtime Beyond EastMTV 2 NHL Center Ice Package Showtime Extreme EastMTV S Video On Demand Channel(s)MTV X Showtime Digital Package

Biography Channel Showtime GroupHistory International The Movie Channel GroupGoodlife Television Network FlixFox Sports World Sundance ChannelWisdom NetworkBET GospelShop NBCFamilyNet


Basic Services Rate Equipment Rental RateLimited Basic (18 Channels) $10.95 Standard Converter with Remote $1.00Expanded Basic (57 Channels) $22.00 Digital Converter (Additional Set) $5.95Standard Basic (75 Channels) $32.95 Digital Converter with Music Choice & PPV $6.95Line Maintenance Plan $1.95 Total Basic (75 Channels) $34.90 Installation of Residental Service Digital Basic Tier (35 Video Chs. + 45 Audio Chs.) $10.50 Unwired Home $30.00Premiere Basic (110 Video Chs. + 45 Audio Chs.) $45.40 Prewired Home $20.00 Multi-Family Residence $15.00Premium Services Additional Outlet (same trip) $10.00HBO, HBO Plus, HBO Family (Analog Service) $11.95 Additional Outlet (separate trip) $15.00HBO Digital Group (6 Channels) $11.95 Relocate Outlet (same trip) $10.00Showtime Group (5 Channels) $10.95 Relocate Outlet (separate trip) $15.00Cinemax Group (4 Channels) $9.95 Wiring Within Walls (per outlet) $40.00The Movie Channel Group (3 Channels) $8.95 Digital Converter (same trip) $5.00Starz Group (6 Channels) $8.95 Digital Converter (separate trip) $10.00Encore Group (6 Channels) $5.95 Reconnect Residential Service $20.00Digital Basic Tier (35 Video Chs + 45 Audio Chs) $10.95 Other ChargesPackaging Returned Check Charge $25.00Showtime Digital Combo (Show, TMC, Flix & Sundance $12.95 Hourly Service Call $30.00HBO Digital Group and Cinemax Digital Group $19.50 Late Fee $2.95Starz Group (6 channels) $8.95 Franchise Fee (City) 5.00%Encore Group (6 channels) $5.95 FCC Fee (Monthly) $0.00 Digital Premium Discount: (Digital Basic Tier plus) Two Premium A La Carte or Packaged Services $2.00Three Premium A La Carte or Packaged Services $4.00Four or More Premium A La Carte or Packaged Services $6.00

Digital Pay-Per-View Services IN Demand PPV Movies (21 Channels) $3.95Video On Demand Movies $4.50Sports Packages (Varies)Special Pay Per View Events (Varies)

TRI-CITIES FIBER NEWORKVideo Services Rates and Charges


Cable Television Programming ServicesService Rates - 2002

Basic Services Rate Equipment Rental (per month) Rate

Basic Service (22 Channels) $15.79 Basic Only Converter $2.00Expanded Basic Service (34) $19.69 Non-Basic Only Converter(Non-Rebuild) $3.99Full Basic Service Service (56 Channels) $35.48 Non-Basic Only Converter (Rebuild) $4.85Plus applicable franchise fees and taxes Digital Converter $4.85

Remote Control $0.30Premium Services

Installation & ServiceHBO $12.99Cinemax $12.99 Install Unwired Home (Aerial within 125 ft.) $43.99Showtime $12.99 Install Prewired Home (Aerial within 125 ft.) $27.99The Movie Channel $12.99 Install Additional Outlet--Initial Install $13.99Starz! & Encore (Digital Subscription) $10.99 Install Additional Outlet-- Separate Trip $21.99

Relocate Outlet $18.99Digital Services Up/Downgrade of Addressable Services $1.99

Upgrade Optional Services--Separate Trip $15.99Digital Basic $12.00 Downgrade Optional Services--Separate Trip $10.99Digital Programming Access Fee $4.99 VCR Connection --Initial Install $5.99Digital Packages: VCR Connection --Separate Trip .$12.99Digital Platinum $76.99 Administrative Fee for Late Payment (Day 30) $2.95Digital Gold $62.99 Administrative Fee for Late Payment (Day 45) $2.00Digital Silver $52.99 Non-Sufficient Funds Charge $20.00Digital Bronze $44.99 Field Collection Fee $20.00Digital Starter (Requires Subscription to Expanded $6.99 Unreturned Non-Addressable Converter $90.00Basic Service) Unreturned Addressable Converter $158.00

Unreturned Digital Converter $318.00Broadband Monthly Magazine $2.99 Unreturned Analog Remote Control $4.00

Unreturned Digital Remote Control $7.19Hourly Service Charge $28.49Trouble Call $16.99

AT&T BroadbandTri-Cities


High Speed Data ServiceResidential Rates and Charges

2002

Services Rate Services RateResidental: w/CATV Residental: No CATV

Platinum Service - Downstream to 3.0 Mbps $63.95 Platinum Service - Downstream to 3.0 Mbps $68.95Gold Service -Downstream to 2.0 Mbps $43.95 Gold Service -Downstream to 2.0 Mbps $48.95Silver Service - Downstream to 1.0 Mbps $33.95 Silver Service - Downstream to 1.0 Mbps $38.95Standard Service - Downstream to 512 Kbps $25.95 Standard Service - Downstream to 512 Kbps $30.95

Other Charges: Other Charges: Additional Email Address (Monthly Fee) $5.00 Additional Email Address (Monthly Fee) $7.50Charge for Data Transfer Over Cap per 50 MB $1.00 Charge for Data Transfer Over Cap per 50 MB $1.50

Installation Services: Installation Services:

Installation (Includes NIC Card & Software) $99.00 Installation (Includes NIC Card & Software) $125.00Installation (No NIC Card & Software) $75.00 Installation (No NIC Card & Software) $100.00Dedicated High Speed Cable Outlet $50.00 Dedicated High Speed Cable Outlet $75.00

Residental Service Packages Residental Service Packages

Platinum Service $63.95 Platinum Service $68.95includes: Speeds Up to 3.0 Mbps Downstream and includes: Speeds Up to 3.0 Mbps Downstream and 512 Kbps Up, Dynamic IP Address, 512 Kbps Up, Dynamic IP Address,Up to 4 Email Addresses, 7.5 MB Personal Web Up to 4 Email Addresses, 7.5 MB Personal WebSpace, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GB

Gold Service $43.95 Gold Service $48.95includes: Speeds Up to 2.0 Mbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream an 256 Kbps Up, Dynamic IP Address, 256 Kbps Up, Dynamic IP Address,Up to 3 Email Addresses, 5 MB Personal Web Up to 3 Email Addresses, 5 MB Personal WebSpace, Data Transfer Cap of 7.5 GB Space, Data Transfer Cap of 7.5 GB

Silver Service $33.95 Silver Service $38.95includes: Speed Up to 1.0 Mbps Downstream includes: Speed Up to 1.0 Mbps Downstreamand 128 Kbps Upstream, Dynamic IP Address and 128 Kbps Upstream, Dynamic IP AddressUp to 3 Email Addresses, 3 MB Personal Web Up to 3 Email Addresses, 3 MB Personal WebSpace, Data Transfer Cap of 5 GB Space, Data Transfer Cap of 5 GB

Standard Service $25.95 Standard Service $30.95includes: Speed Up 512 Kbps Downstream and includes: Speed Up 512 Kbps Downstream and 128 Kbps Upstream, Dynamic IP Address 128 Kbps Upstream, Dynamic IP Address2 Email Address, Data Transfer Cap of 3 GB 2 Email Address, Data Transfer Cap of 3 GB

TRI-CITIES FIBER NETWORK


High Speed Data ServiceBusiness Rates and Charges

2002

High Speed Data Services Monthly Installation Business Rate Charges Rate Standard Business Service - Level 1 $49.95 Standard Business Service - Level 1 $150.00Standard Business Service - Level 2 $69.95 Standard Business Service - Level 2 $200.00Business Plus Service - Level 1 $89.95 Business Plus Service - Level 1 $300.00Business Plus Service - Level 2 $99.95 Business Plus Service - Level 2 $350.00Business Elite Service - Level 1 $129.95 Business Elite Service - Level 1 $500.00Business Elite Service - Level 2 $169.95 Business Elite Service - Level 2 $550.00Direct Business Service - Customized Quote Direct Business Service - Customized Quote

Other Charges Charge Additional Static Email Address (Monthly Fee) $15.00 Charge for Data Transfer Over Cap per 50 MB $1.50

Monthly Monthly

Business Service Packages Rate Business Service Packages Rate

Standard Service Level 1 $49.95 Standard Service Level 2 $69.95includes: Speeds Up to 512 Kbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, One Static IP Address 256 Kbps Upstream, One Static IP AddressUp to 4 Email Addresses, 5 MB Web Space Up to 5 Email Addresses, 7.5 MB Web SpaceSpace, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GBInstallation Charge $150.00 $200.00

Business Plus Service Level 1 $89.95 Business Plus Service Level 2 $99.95includes: Speed Up to 512 Kbps Downstream includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, Three Static IP Addresses and 256 Kbps Upstream, Three Static IP AddressesUp to 10 Email Addresses, 10 MB Web Space Up to 10 Email Addresses, 10 MB Web SpaceSpace, Data Transfer Cap of 15 GB Space, Data Transfer Cap of 15 GBInstallation Charge $300.00 $350.00

Business Elite Service Level 1 $129.95 Business Elite Service Level 2 $169.95includes: Speed Up to 2.0 Mbps Downstream includes: Speeds Up to 3.0 Mbps Downstream and 128 Kbps Upstream, Five Static IP Addresses and 512 Kbps Upstream, Five Static IP AddressesUp to 15 Email Addresses, 15 MB Web Space Up to 15 Email Addresses, 15 MB Web SpaceSpace, Data Transfer Cap of 20 GB Space, Data Transfer Cap of 20 GBInstallation Charge $500.00 Installation Charge $550.00

Business Direct ServiceThe Tri-Cities can provide customized service tailored to the high speed data needs of growing organizations including fiber connnectivity directly to the business within the designated service area.

TRI-CITIES FIBER NETWORK


Tri-Cities Residential Telephony Packaging and Pricing

A La Carte Basic Standard Family Family Plus A La Carte A La CarteFeatures Rates Service Service Service Service Percentages Avg. Rate

Basic Touch Tone Service-Primary Line $16.95 x x x xBasic Additional Line $12.95 x 15% $1.94911 Free x x x x Call Waiting $4.00 x x x 10% $0.40Caller ID (name and number) $4.00 x x x 7% $0.283 Way Calling $4.00 x x x 3% $0.12Call Forwarding $4.00 x x 3% $0.12Preferred Call Forwarding $4.00 x x 1% $0.04Prioirity Ring $4.00 x x 1% $0.04Distinctive Ring $4.00 x x 1% $0.04Selective Call Blocking $4.00 x x 1% $0.04900/976 Call Blocking Free x x x x 1% Last Call Return $4.00 x x 2% $0.08Speed Dial 8 $3.00 x x 3% $0.09Speed Dial 30 $4.00 x 2% $0.08Non-published number $2.75 $0.00Listing Omitted from Phone Directory Free x x x x Standard Directory Listings Free x x x x Additional Directory Listings $1.55 x 5% $0.08Inside Wire Maintenance $2.00 x 15% $0.30Continuous Redial *66 $2.00 x x x 2% $0.04Anonymous Call Rejection $0.00 x x $0.00Customer Code Restriction $0.00 x x x $0.00Voice Mail $4.00 15% $0.60Voice Mail with Extensions $4.50 x 2% $0.09Voice Mail with Pager Notifications $6.95 2% $0.14Voice Mail with Pager Notifications & Ext. $7.95 x 1% $0.08


Tri-Cities Small Business Telephony Packaging and Pricing

Basic Standard Business Business DeluxeA La Carte Business Business Plus Advantage Business A La Carte A La Carte

Features Rates Service Service Service Service Service Percentages Avg. RateBasic Touch Tone Service-Primary Line $24.95 x x x x xBasic Touch Tone Service-Secondary Line $24.95 3% $0.75Basic Additional Line -Roll Over $9.95 $0.00 $1.00 $2.00 $3.00 10% $1.00911 Free x x x x x Call Waiting $6.50 x x x x 5% $0.33Caller ID Deluxe $10.00 x x x 5% $0.50Caller ID Enchanced $15.00 x x 1% $0.153 Way Calling $5.00 x x x x 2% $0.10Call Forwarding - Busy Line $4.25 x x x 2% $0.09Call Forwarding - No Answer $4.25 x x x 1% $0.04Prioirity Ring $9.00 x x x 1% $0.09Distinctive Ring $9.00 x x x 1% $0.09Selective Call Blocking $5.00 x x x 1% $0.05900/976 Call Blocking Free x x x x x Call Return $5.00 x x x 2% $0.10Call Trace $6.50 1% $0.07Speed Dial 8 $4.00 x 3% $0.12Speed Dial 30 $5.00 x x 2% $0.10Non-published number $2.75 1% $0.03Listing Omitted from Phone Directory Free x x x x x Standard Directory Listings Free x x x x x Additional Directory Listings $2.00 x x 5% $0.10Foreign Directory Listings $2.00 x 2% $0.04Inside Wire Maintenance $4.00 x x 25% $1.00Continuous Redial *66 $2.00 x x x x 2% $0.04Anonymous Call Rejection $2.00 x x x $0.00Customer Code Restriction $2.00 x x x x $0.00Voice Mail $15.00 x 10% $1.50Voice Mail with Extensions $17.50 x 2% $0.35Voice Mail with Pager Notifications $20.00 2% $0.40Voice Mail with Pager Notifications & Ext. $22.50 x x 1% $0.23Information at 411 $0.75Courtesy Complete for 411 $7.50


Tri-Cities Service Type Distribution

Residential Category Type Video Telecom Data

Homes Passed 29,337 29,337 29,337 Projected Residential Subscribers 10,561 2,369 3,639 Service Penetration 36% 8% 12%Video, Telecom and Data Subscribers 1,056 1,056 1,056 Video and Data Subscribers 2,323 - 2,323 Video and Telecom Subscribers 400 696 - Telecom and Data Subscribers - 189 189 Video Subscribers - Analog Only Customer 2,968 - - Video Subscribers - Analog & Digital Video Only Customer 3,814 - - Telecom Only Customer - 426 - Data Only Customer - - 70

Commerical Category Type Video Telecom Data

Commercial Units Passed 4,541 4,541 4,541 Projected Commercial Subscribers 47 550 795 Service Penetration 1% 12% 18%Video, Telecom and Data Subscribers 5 5 5 Video and Data Subscribers 12 - - Video and Telecom Subscribers 5 5 - Telecom and Data Subscribers - 50 50 Video Subscribers - Analog Only Customer 15 - - Video Subscribers - Analog & Digital Video Only Customer 10 - - Telecom Only Customer - 490 - Data Only Customer - - 740


Tri-Cities Consolidated Plan Page: 38Tri-Cities, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002Broadband Service Staffing

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Telecommunications Service EmployeesSwitch Techs 1 1 2 2 2 2 2 2 2 2Overtime eligible 1 1 2 2 2 2 2 2 2 2Field Techs 1 4 4 4 4 5 5 5 5 6Overtime eligible 1 4 4 4 4 5 5 5 5 6Provisioning Reps 1 2 2 2 2 2 2 3 3 3Overtime eligible 2 2 2 2 2 2 2 2 2 2Total Telecommunications Employees 4 8 10 10 10 11 11 12 12 13

Cable Service EmployeesGeneral Managers 1 1 1 1 1 1 1 1 1 1Office Manager 1 1 1 1 1 1 1 1 1 1MIS Director 1 1 1 1 1 1 1 1 1 1Customer Service Representatives 5 7 7 7 7 7 7 7 7 7Support Staff 2 2 2 2 2 2 2 2 2 2Technical Manager (s) 1 1 1 1 1 1 1 1 1 1Headend Technicians 2 2 2 2 2 2 2 2 2 2Construction Manager/Plant Manager 2 2 1 1 1 1 1 1 1 1Broadband Service Technicians 3 5 5 5 5 5 5 5 5 5Installer/Service Technician 4 4 4 4 4 4 4 4 4 4Contract Installers 7 4 4 4 4 4 4 4 4 4Marketing and Sales Manager 1 1 1 1 1 1 1 1 1 1Contract Field Representatives 8 8 3 3 3 3 3 3 3 3Total 41 43 37 37 37 37 37 37 37 37

Total Telecommunications and Cable Service Employees 45 51 47 47 47 48 48 49 49 50


Tri-Cities Consolidated Plan Page: 20Tri-Cities, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002Cash Flow Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Video Services Revenue $934,798 $6,210,252 $7,168,074 $7,471,713 $7,714,741 $7,967,182 $8,304,672 $8,578,022 $8,862,010 $9,237,405Video Services Operating Expenses $1,858,679 $5,163,281 $5,634,973 $5,833,710 $6,034,353 $6,202,741 $6,425,251 $6,620,871 $6,852,074 $7,055,848Video Services Customer Cash Flow ($923,881) $1,046,971 $1,533,101 $1,638,003 $1,680,388 $1,764,441 $1,879,421 $1,957,151 $2,009,937 $2,181,557

Residential High Speed Data Revenue $164,484 $1,405,262 $1,903,237 $1,993,411 $2,028,156 $2,064,116 $2,163,840 $2,203,325 $2,244,019 $2,353,980Residential High Speed Data Expense $124,954 $548,306 $746,417 $766,114 $780,476 $795,705 $817,624 $833,950 $850,780 $874,864Residential High Speed Data Cash Flow $39,530 $856,957 $1,156,820 $1,227,298 $1,247,680 $1,268,411 $1,346,216 $1,369,375 $1,393,239 $1,479,116

Commercial Video and High Speed Data Revenue $764,684 $2,463,847 $2,313,173 $2,410,835 $2,439,764 $2,469,040 $2,573,293 $2,604,172 $2,635,421 $2,746,709Commercial Video and High Speed Data Operating Exp. $69,872 $413,999 $447,171 $457,982 $470,157 $474,200 $485,691 $489,932 $494,234 $514,546Commercial Cash Flow $694,812 $2,049,848 $1,866,002 $1,952,853 $1,969,607 $1,994,841 $2,087,602 $2,114,239 $2,141,186 $2,232,164

Telecommunications Revenue $769,565 $5,354,355 $6,171,367 $6,480,207 $6,803,544 $7,143,877 $7,500,004 $7,875,568 $8,269,169 $8,682,572Telecommunications Expenses $584,217 $1,961,760 $2,126,961 $2,208,885 $2,292,915 $2,511,742 $2,607,963 $2,799,958 $2,910,450 $3,168,176Telecommunications Cash Flow $185,348 $3,392,596 $4,044,406 $4,271,322 $4,510,629 $4,632,135 $4,892,041 $5,075,610 $5,358,719 $5,514,396

Total Revenue $2,633,530 $15,433,716 $17,555,850 $18,356,166 $18,986,205 $19,644,216 $20,541,809 $21,261,087 $22,010,619 $23,020,666Total Operating Expense $2,637,722 $8,087,346 $8,955,522 $9,266,690 $9,577,902 $9,984,388 $10,336,529 $10,744,712 $11,107,538 $11,613,434EBITDA ($4,192) $7,346,371 $8,600,328 $9,089,476 $9,408,304 $9,659,828 $10,205,280 $10,516,376 $10,903,082 $11,407,233

Interest Earned $685,325 $189,780 $145,673 $218,898 $279,394 $321,358 $367,483 $422,356 $482,552 $549,280

Municipal Bond - Interest $1,492,688 $2,985,375 $2,985,375 $2,985,375 $2,880,504 $2,735,086 $2,582,679 $2,422,947 $2,255,537 $2,080,081Municipal Bond - Principal $0 $0 $0 $1,460,314 $3,025,499 $3,170,917 $3,323,324 $3,483,056 $3,650,466 $3,825,922Municipal Bond - Total $1,492,688 $2,985,375 $2,985,375 $4,445,689 $5,906,003 $5,906,003 $5,906,003 $5,906,003 $5,906,003 $5,906,003

Net Operating Cash Flow ($811,554) $4,550,775 $5,760,626 $4,862,685 $3,781,695 $4,075,184 $4,666,760 $5,032,729 $5,479,631 $6,050,510Cummulative Cash Flow ($811,554) $3,739,221 $9,499,847 $14,362,532 $18,144,227 $22,219,410 $26,886,171 $31,918,900 $37,398,531 $43,449,041

Operating Expense Ratio 100% 52% 51% 50% 50% 51% 50% 51% 50% 50%Operating Income Ratio 0% 48% 49% 50% 50% 49% 50% 49% 50% 50%

Debt Service Coverage Ratio 0.00 0.00 2.93 2.09 1.64 1.69 1.79 1.85 1.93 2.02Rate of Return on Depreciated Assets 2.15% 14.78% 18.17% 20.61% 22.91% 25.37% 29.08% 32.83% 37.68% 44.19%Outstanding Debt Ratio to Assets 0.95 0.97 1.00 1.04 1.09 1.16 1.24 1.35 1.49 1.68

Cable Services Percentage of Total Revenue 71% 65% 65% 65% 64% 64% 63% 63% 62% 62%Telecom Services Percentage of Total Revenue 29% 35% 35% 35% 36% 36% 37% 37% 38% 38%

Cash on Hand $27,925,259 $9,711,552 $14,593,185 $18,626,245 $21,423,883 $24,498,888 $28,157,074 $32,170,155 $36,618,637 $41,625,740


Tri-Cities Consolidated Plan Page: 22Tri-Cities, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002Sources and Uses

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

SourcesBegin Cash on Hand $0 $27,925,259 $9,711,552 $14,593,185 $18,626,245 $21,423,883 $24,498,888 $28,157,074 $32,170,155 $36,618,637Paid In Capital - Broadband Service Provider $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0Revenue Bond Issue Proceeds - Capital Budget $55,235,776 $0 $0 $0 $0 $0 $0 $0 $0 $0Revenue Bond Issue Proceeds - Capitalized Interest $5,970,750 $0 $0 $0 $0 $0 $0 $0 $0 $0Cost of Revenue Bond Financing $526,997 $0 $0 $0 $0 $0 $0 $0 $0 $0Original Issue and Underwriters Discount $781,791 $0 $0 $0 $0 $0 $0 $0 $0 $0Revenue Bond Financing Insurance $333,105 $0 $0 $0 $0 $0 $0 $0 $0 $0Excess Revenue Bond Proceeds $1,581 $0 $0 $0 $0 $0 $0 $0 $0 $0Interest Earned $685,325 $189,780 $145,673 $218,898 $279,394 $321,358 $367,483 $422,356 $482,552 $549,280Utility Plant Improvement Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0EBITDA $0 $7,346,371 $8,600,328 $9,089,476 $9,408,304 $9,659,828 $10,205,280 $10,516,376 $10,903,082 $11,407,233Total Sources $63,635,325 $35,461,409 $18,457,553 $23,901,559 $28,313,942 $31,405,069 $35,071,651 $39,095,806 $43,555,789 $48,575,149

UsesCapital Expenditures $32,471,293 $22,764,482 $878,993 $829,625 $984,056 $1,000,178 $1,008,575 $1,019,648 $1,031,149 $1,043,406Operating Loss $4,192 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Issue Interest $1,492,688 $2,985,375 $2,985,375 $2,985,375 $2,880,504 $2,735,086 $2,582,679 $2,422,947 $2,255,537 $2,080,081Revenue Bond Principal Reduction $0 $0 $0 $1,460,314 $3,025,499 $3,170,917 $3,323,324 $3,483,056 $3,650,466 $3,825,922Cost of Revenue Bond Financing $526,997 $0 $0 $0 $0 $0 $0 $0 $0 $0Original Issue and Underwriters Discount $781,791 $0 $0 $0 $0 $0 $0 $0 $0 $0Revenue Bond Financing Insurance $333,105 $0 $0 $0 $0 $0 $0 $0 $0 $0Reimbursement - Broadband Service Provider $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0Utility Plant Improvement Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Property Tax Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Fund Transfer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Uses $35,710,066 $25,749,857 $3,864,368 $5,275,314 $6,890,059 $6,906,181 $6,914,577 $6,925,651 $6,937,152 $6,949,409

End Cash on Hand $27,925,259 $9,711,552 $14,593,185 $18,626,245 $21,423,883 $24,498,888 $28,157,074 $32,170,155 $36,618,637 $41,625,740

Total Amount of Revenue Bond Financing: $62,850,000


Project Financing Assumptions

Revenue Bonds Issued by the Tri-Cities with General Obligation Pledges4.75% Net Interest CostInterest Only for 3 YearsInterest Capitalized for 2 YearsAmortized for Additional 15 Years


Project Capitalization Assumptions

• Capital Budget $55,235,776• Capitalized Interest $5,970,750• Underwriter’s Discount $781,791• Bond Issuance Cost $526,997• Bond Insurance $333,105• Excess Proceeds $1,581• Total Bond Issue $62,850,000


Strategic Next Step Options

If City Council elects to proceed:1. Research and define financing options.2. Pursue partnering arrangement with

neighboring municipal entities or service providers.

3. Hold public referendum.4. If majority vote, proceed to develop

system.


Broadband Network Development

Phase I – Prior to Bond Issue Closing• Initiate Revenue Bond Financing• Vendor Selection• Mapping, Engineering and DesignPhase II – After Bond Issue Closing• Technical and Customer Service Staffing• System Construction• Finalize Service Offerings and Rates• Sales and Marketing Strategic Planning

Documents

Tri-Cities Broadband Initiative